<p>How best to finance long-term care has become in recent years a highly topical issue. A range of factors have encouraged debate. These include the projected continued growth in the numbers of very elderly people, uncertainty about future levels of family care, and more generally uncertainty about future levels of need for long-term services.\ud \ud <p><p><p>To inform debate it would be most valuable to have reliable projections of two key variables. The first is the likely level of demand for long-term care services under different scenarios about changes in life and health expectancy and in socio-economic variables. The second is the costs associated with meeting the expected demand for care and the distribution of these costs under different policies and funding mechanisms.\ud \ud <p><p><p>Projections have been made for this country by at least three agencies. The Institute of Actuaries (Nuttall et al., 1994) has made projections of the likely numbers of disabled people and of the costs of caring for them on varying assumptions. London Economics and the Institute for Public Policy Research (Richards et al., 1996) have made projections of future patterns of demand and supply of long-term care and associated costs. The Department of Health has also made broad projections of expenditure on long-term care on a range of assumptions (House of Commons Health Committee, 1996).\ud \ud <p><p><p>The Department of Health agreed a new study of long-term care demand and finance as part of the PSSRU's long-run programme of research at the London School of Economics. This report describes the model developed by the PSSRU, discusses some of the key issues that were addressed in producing the model, and outlines some illustrative projections made using the model
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